Asia stocks sluggish ahead of U.S. jobs
HONG KONG (Reuters) - Asian stocks were largely unchanged on Thursday ahead of the latest U.S. payrolls report, while the U.S. dollar remained near a three-week low against the euro, sensitive to lingering doubts about its reserve status.
The U.S. unemployment rate is forecast to rise to 9.6 percent, the highest in 26 years, testing even the most diehard bulls on the extent of the recovery underway despite positive indications overnight of manufacturing in China, the euro zone and the United States.
"Manufacturing data from the United States and other major economies came out quite solid, but investors remain cautious ahead of U.S. jobs data and corporate earnings," said Yoo Soo-min, a market analyst at Hyundai Securities in Seoul.
Japanese government bond futures slipped, with investors focussed on the results of a 2.1 trillion yen (13.2 billion pounds) auction of 10-year bonds meant to help Tokyo finance stimulus spending. The level of market demand for the bonds will be key in judging how expensive borrowing will be for the government.
Crude prices edged up towards $70 a barrel, with a reported increase in U.S. gasoline inventories ahead of the summer driving season not able to keep oil down for long.
Japan's Nikkei share average .N225 was flat on the day but far from an eight-month high reached three weeks ago.
The MSCI index of Asia Pacific stocks outside Japan .MIAPJ0000PUS rose 1 percent, with strength concentrated in the technology and materials sectors.
Stocks in Taiwan rose 1.4 percent, outpacing the region as investors eager to gain exposure to Chinese economic growth prospects pushed to the benchmark TAIEX index to a fresh one-month high.
Valuations of technology firms in Taiwan, on a 12-month forward price-to-earnings basis, have been coming down in the last few months and are currently around 23 times compared with 50 times in April, according to global estimates tracker I/B/E/S.
That has opened up entry points for investors in stocks such as mobile phone chipmaker Mediatek (2454.TW), which was up 2.4 percent.
The U.S. dollar made up some lost ground against major currencies after it fell on Wednesday on news China was seeking debate about proposals for a new global reserve currency at next week's Group of Eight meeting.
However, dealers were cautious about taking big positions ahead of the June U.S. employment report. U.S. private employers slashed a bigger-than-expected 473,000 jobs in June, according to a report from ADP Employers Services on Wednesday, making the market wary that the government's data may show more positions lost than forecast.
"The ADP number was worse than expected so now there might be some downside risk in payrolls which makes it harder to take large positions," said Yuki Sakasai, currency strategist at Barclays Bank Tokyo.
The euro was trading nearly unchanged on the day at $1.4134, having carved out a $1.4340 to $1.3750 range since hitting a high for the year on June 3.
The Australian dollar was down 0.3 percent to US$0.8065, weighed after trade data showed a much larger than expected shortfall of AU$556 million. Continued...
